Rollovers from defined contribution (DC) plans to individual retirement accounts (IRAs) reached $700 billion in 2021 and advisors are taking notice, intermediating $444 billion in rollover assets. According to our findings, 86% of these rollovers are through existing participant-advisor relationships—as opposed to new advisor relationships—highlighting the importance of establishing relationships with participants during their working years, prior to life changes that often trigger rollover events, including retirement.

There is still plenty of room for retirement providers to step in. Advisor-intermediated rollovers accounted for less than half (43%) of the number of individual DC to IRA rollover transactions. At the same time, the cumulative asset value is over half—57.7%. Furthermore, the average balance for advisor-intermediated IRAs ($211,100) is significantly higher than for self-directed IRAs ($120,800).

As providers evaluate this sizable IRA rollover opportunity, they must contend with investor inertia. More than half (56%) of active 401(k) plan participants allowed assets to remain in a former employer’s plan after separating from service at some point in their careers and 21.6% of all DC plan assets eligible for distribution in 2021 were rolled into an IRA, a decrease from 25.4% two years ago. This decline was matched by an increase in assets remaining in-plan.

What steps should providers undertake to help investors pursue optimal retirement outcomes? Continue to explore this theme and holistically assess the 401(k) and IRA markets with our latest research, U.S. Retirement End-Investor 2022.